Methodology for the strategy-oriented distribution of decision autonomy in global production networks

Abstract

Multinational companies deal with production processes in various countries by operating global production networks. These production processes are allocated to production plants with different levels of autonomy regarding strategic and operative decisions. Typically, each plant and the whole network are managed by one or more network managers who have to deal with a decision overload in their daily business. 50% of their decisions are made in less than 9 minutes and only a small amount of decision tasks are dealt with for more than one hour. To reduce this dilemma, it was found that the distribution of decision autonomy can be enhanced. It depends on the company’s strategy and complexity dimensions in global production networks. However, so far there is little evidence on how to better distribute decision autonomy in global production networks in detail. Furthermore, it is not transparent at what level of cetralism a global production network should be managed without cutting the capabilities of production plants. This paper presents a methodology, which examines relevant strategy dimensions and derives guidance on how to distribute decisions in global production networks. First, the network and production strategies of global production networks are classified. Second, relevant complexity dimensions and decisions are introduced. Third, the influence of the distribution of decision autonomy on strategy dimensions is quantified by an impact model. Furthermore, the effect of complexity on the distribution of decision autonomy is quantified by an impact model. Here, the integration of empirical data was used to validate the different influences. Finally, the ideal distribution of decision autonomy for specific production plants in the global production network is derived. The methodology is applied in an industrial use case to prove its practical impact.